5 steps to better technology budgets

By Kevin Connor

Feb 23, 2011

Kevin Connor is vice president of Decision Lens’ Solutions Group.

The Obama administration is challenging agencies to achieve mission goals with less money. In December 2010, the Office of Management and Budget announced a 25-point plan to restructure federal IT, with a focus on aligning the acquisition process with the technology cycle. Then in January’s State of the Union address, President Barack Obama proposed freezing annual domestic spending for the next five years, starting this year. Clearly, budgeting for technology is being scrutinized.

Prioritizing projects and gaining buy-in are complex budgetary challenges that often result in an equally complex cycle of dysfunctional decision-making and poor outcomes.

Agencies must improve collaboration and transparency for more efficient and effective decisions. With the proper process and structure in place, organizations faced with decisions that involve multiple stakeholders and criteria can find a course of action and create value.

Here are five ways to improve budget decisions.

1. Define goals and objectives, and establish a framework for a decision before evaluating options.

Establish a decision goal, and have a collaborative discussion about the factors that should influence the decision. Then evaluate alternatives within that framework. Forcing decision-makers to establish their priorities against a goal and then holding projects to that test overcomes power-driven arguments and limits fights over pet projects.

2. Engage an appropriately broad number of stakeholders.

To counter the limitations of asymmetric information — complementary information known by different people — define and prioritize key decision criteria. Then engage subject-matter experts on how the proposed options perform against those criteria. That approach broadens participation in critical decisions and gathers the best possible information for making an informed decision.

3. Define the roles of participants, and divide and conquer.

Often, people do not understand how decisions are made at their organization. For instance, what group or individual has the final say? Consider the nature of the decisions, and break down the process of determining and weighting criteria, proposing options, and evaluating those options against the criteria. Then assign those activities to the people or groups best suited to them.

4. Identify critical relationships among projects.

Ask yourself whether some projects need to overlap in terms of timing and effort to realize the value of each — or whether they are competing solutions to the same problem. Likewise, an activity might be well funded in one area while the project’s beneficiaries are ranked lower in another. Or teams might be pursuing solutions to similar problems without considering how to combine their efforts to improve efficiency, project integration and knowledge sharing. Therefore, mapping interrelationships is essential to avoid delays or wasted efforts in achieving larger goals.

There is not a single right answer to a budget portfolio decision. All decisions are largely predictions based on forecasts and projections, and there is no way to know the single best choice. Consider scenarios that could change assumptions about the constraints, costs and value of the portfolio. A proven technique for dealing with complex decision, such as the Analytic Hierarchy Process, can help you structure and aggregate information and map the relative importance of cost, interrelationships and other important criteria.

In short, structure decisions and crowdsource insights. Then review priorities and the relevant data and opinions of stakeholders and experts. Those steps will allow agencies to focus their discussions on a limited number of trade-offs and information requirements, and create the level of comfort needed to move forward.